Despite Volodymyr Zelenskyy’s best efforts, his administration has yet to shake off perceptions of influence by oligarch Ihor Kolomoisky. And the matter of Privatbank, formerly owned by Kolomoisky prior to its nationalization, seems to sneak into every conversation involving the new government’s priorities and business.
Kolomoisky has been working hard to regain the nationalized bank, launching multiple court suits and even winning recognition from a lower court that the nationalization was illegal.
And noted Ukraine-watcher and economist Timothy Ash, on the sidelines of a recent investment forum in the eastern Ukrainian port city of Mariupol, says that while the basics for investment are there, key decisions remain for the Zelenskyy government – including the question of Privatbank. The Ukrainian president, speaking at the forum, stated unequivocally that Privatbank will not be returned to Kolomoisky. But as Ash points out, “There is a legal challenge to nationalize. Clearly there are efforts by the former owners to take ownership back…” adding that his view is that the nationalization of Privatbank was a condition for Ukraine’s improved macroeconomic stability.
But the government still needs a ‘Plan B’ in case the courts do finally rule that the nationalization was illegal, Ash said. And recovering the lost funds – estimated at anywhere from $3 billion to $5.5 billion – is a major issue for Ukraine’s creditors and partners, including the International Monetary Fund and the European Bank for Reconstruction and Development.
“If the courts determine that there was some illegal activity involved in the original failure of the bank, the state suffered a huge loss as a result of it...It was more than 5% GDP of the country…The state needs to go after the former owners of banks that took money from depositors. Why should the Ukrainian taxpayer be left with a huge bill of bank failures?” Ash argues.
Furthermore, the economist praises the authorities' decision to hold a Cabinet session and the investment forum in Mariupol as opposed to the more usual location – Kyiv. Despite the common outside view that due to Mariupol's proximity to the demarcation line it is an unsafe place, as well as the logistical challenges of getting there, Ash notes that visitors appreciate the opportunity "to see what else there is in Ukraine."